Answered

The initial cost for producing a product is $1,200. The cost of producing each unit of the product is $5. The total cost is the sum of the initial cost and the cost per unit of the product times the number of units sold. What is the least number of units, x, that should be produced in order for the average total cost per unit to be $7 or less?



Answer :

adioabiola

The least number of units, x, that should be produced in order for the average total cost per unit to be $7 or less is 600 units.

Average total cost

  • Initial cost = $1,200
  • Cost of producing each unit = $5
  • Number of units = x

Total cost = 1200 + 5x

Average total cost per unit = $7

Average total cost = Total cost / number of units

7 = (1200 + 5x) / x

cross product

7 × x = 1200 + 5x

7x = 1200 + 5x

7x - 5x = 1200

2x = 1200

x = 1200/2

x = 600 units

Therefore, the least number of units, x, that should be produced in order for the average total cost per unit to be $7 or less is 600 units

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